The economist-philosopher F.A. Hayek warned about “the limits of knowledge” and the “fatal conceit” exhibited by so many “experts.” The communists and socialists claimed that they could allocate resources and income better than markets. These false claims ultimately destroyed the lives of tens of millions and caused untold human misery. Despite the never-ending failures of socialist and other collectivist schemes (such as Obamacare), colleges, governments and the media are still filled with smug — but ignorant or uncaring — individuals (think Jonathan Gruber) who still think they are smarter than markets, and thus have the self-appointed right to control your life…

… Go back and look at predictions made by the experts, and then look at what really happened. The climate alarmists 15 or so years ago were forecasting catastrophic events by this time. Yet sea levels have not been rising any faster than they have been for centuries. The major climate models were projecting steady rises in global warming each year, yet average temperatures have not risen for 17 years. Al Gore and his alarmist crowd told us that the Arctic would be free of sea ice during the summer by now and that we would be having more and stronger tornadoes and hurricanes. The Arctic sea ice is still with us, and few ships dare sail there. Many tornado and hurricane records have been broken — not because there were more — but because there have been fewer. Florida has gone a record nine straight seasons without a significant hurricane.

… Forecasters need to have a good understanding of the major variables that might greatly affect their reasoning. The safest starting point for most forecasts is what happened in the previous period. Tomorrow’s weather is likely to be similar to today’s. One might begin an economic forecast by assuming next year is likely to look much like this year, then alter the forecast based on assumed changes in policy. For instance, if you assume the Republican-led Congress is likely to reduce government spending as a share of gross domestic product, and if you believe, as many of us do, that government spending (at the current high levels) is a drag on growth, then it is sensible to boost the growth estimate a bit — other things being equal. This same exercise needs to be repeated with each major variable — taxes, regulations, monetary actions, changes in oil prices — and what Russia’s Vladimir Putin might do next.

… Forecasters in most disciplines have much to be modest about, and it is foolhardy to make radical changes either in public policy or in one’s personal life based on pronouncements of the latest fashionable guru, the neighborhood fortune teller or the experts’ forecast models. Happy new year. __ Don’t Trust “Expert” Forecasts

Some types of predictions are far more likely to go awry than other types. The more complex and chaotic the system, the less accurate timed predictions are likely to be. When academics, journalists, and the politically connected make bad predictions, they are rarely punished for them.

Fact: Human beings love to predict the future.

Fact: Human beings are not very good at predicting the future.

Fact: Because the incentives to predict are quite imperfect — bad predictions are rarely punished — this situation is unlikely to change.